Life insurance makes your family work in difficult times. Whether the person is single or married, if the family members are dependent on the income of the person, that is, he is the only earning person in the family, then life insurance provides some financial relief to the people dependent on him after he leaves. Life insurance is not one of a kind. One of its various categories is term life insurance. The primary objective of the term insurance plan is to provide income option for the family in the unfortunate event of the death of the policyholder.
Term plans can be purchased for a fixed time, such as 10, 20 or 30 years. Coverage is available in this plan for a selected tenure. In such a life insurance policy, there is no maturity benefit. These provide life cover without savings/profit component. So they are cheaper than other policies. In term insurance, a certain sum of money is given to the beneficiary under the policy, in case of death of the policyholder during the policy term.
Things to keep in mind before buying the first term plan
1. As the age increases, the cost of the term plan also increases. That means your premium is high. At the same time, if the term plan is taken at a young age, then the premium is less. Also, there is no need for a medical test to take it.
2. Before taking term insurance, calculate how much coverage will be required for those dependent on you. A proper term insurance coverage will be 10 to 20 times of your annual income and liabilities. For example, if your annual income is 5 lakh rupees and you have a loan of 20 lakh rupees, then you have to apply for insurance cover up to 1 crore rupees. This much coverage will be enough to meet your debt and your family’s contingency needs.
3. Also decide how long you want to work. The term plan should cover your working years as you will have no income after that. So if you are 25 years old and want to work till the age of 60 years, then you have to apply for a ten-year-old tenure to cover your income.
4. Before taking a term plan, find out about the term plans of various insurance companies. After that choose the plan which is giving the most coverage at the lowest premium. In case of some insurer accident, premiums can be offered, riders along with the plan through additional amount etc. Therefore, first, compare all policies, then choose.
5. Before taking a term plan, also check the claim settlement ratio of the insurer. The claim settlement ratio is the figure of how many settlement claims were made in a year.